Paycom slashed to ribbons by 9 firms after dismal guidance: 4 big analyst cuts

Investing.com — Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at ZoomInfo Technologies, Paycom Software, Xponential Fitness , and Stevanato Group.

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Paycom Software hit with 9 downgrades on lowered sales outlook

After Paycom Software (NYSE:PAYC) reported Q3 results and a disappointing revenue forecast, its stock price plummeted - down nearly 40% in recent trading - and the results also prompted a parade of Wall Street firms to downgrade their ratings on the stock and dramatically cut their share-price targets, as reported in real time on InvestingPro.

For instance, Deutsche Bank shifted from Buy to Hold, slashing the price target by more than half, to $175.00 from the prior $400.00. "The company missed its 3Q revenue guide and provided a preliminary FY24 outlook well short of expectations as the company signaled adoption of its Beti [automated payroll processing] solution is driving greater efficiencies for customers and saving them money on services and unscheduled payroll runs, negatively impacting monetization opportunities for Paycom,” wrote the analysts.

Oppenheimer also moved to the sidelines on the company, with the analysts removing their prior $400 price target. “There is a lot to like with Paycom’s scale, high profit margins and organically built all-in-one HCM platform but the revenue growth driven-by the BETI solution is slowing meaningfully as the self-service capabilities reduce the need for services from the installed-base,” wrote Oppenheimer.

Also cutting the stock to neutral-equivalent ratings were {0||Piper Sandler}}, TD Cowen, KeyBanc, Needham & Company, William Blair, Citi, TD Cowen, and Stifel. Those with price targets put the stock at around or below $200.

After the plunge, shares were trading around $149.50 in afternoon trading.

ZoomInfo Technologies slashed at Goldman Sachs following Q3

Goldman Sachs lowered ZoomInfo Technologies (NASDAQ:ZI) to Neutral from Buy and cut its price target to $17.00 from $30.00 after the company's mixed results for Q3/23 and a cautious future outlook - all of which led to a 16% decline in its stock price Tuesday.

Goldman Sachs highlighted several concerns, among them the slower-than-projected rise in tech hiring - a cornerstone of its thesis - with signs pointing to muted growth next year despite a previously anticipated hiring surge.

The analysts also wrote that key leading indicators reveal waning momentum, such as a quarter-over-quarter decrease in customers with more than $100 in annual contract value (ACV), a more significant decline in growth for current remaining performance obligations (CRPO) compared with that for remaining performance obligations (RPO), and continued bad debt expense impacting upcoming earnings.

Shares were lately losing another 3.6% to $12.49.

Two more downgrades

Xponential Fitness (NYSE:XPOF) shares slid 9% to $13.01 after BofA Securities downgraded the company to Neutral from Buy and cut its price target to $16.00 from $35.00.

Jefferies downgraded Stevanato Group (NYSE:STVN) to Hold from Buy and cut its price target to $29.00 from $39.00. Shares were recently plunging nearly 11% to $24.97.

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